Oral Answers to Questions

Eric Illsley: My right hon. Friend the Secretary of State said a few moments ago that it was not down to him to keep a running tally of salaries within the BBC, but does he think it is right for a senior BBC executive to be awarded a pay rise this year of £100,000, when other workers in public sector-funded organisations are required to accept pay rises at and around 2 per cent.? Does he think that is a good use of licence fee payers' money?

Simon Hughes: I thank the Secretary of State for his response. He will be aware that one of the big concerns the length of the country is the pocket money pricing of alcohol in respect of off-sales from supermarkets and other such places. Given that today's Select Committee on Home Affairs report on policing contained a specific recommendation to his Department and that the "Tackling Booze Britain" report by my Liberal Colleagues asks that there be a minimum price for alcohol sales, and negotiation with the EU, if necessary, can he give an undertaking that this issue will be addressed by his Department, so that we can stop vodka, other spirits and beers being bought for cheaper than almost everything else that is available in many of our supermarkets?

Tessa Jowell: Let me separate out two elements from my hon. Friend's question. First, as he will know, the private-sector contribution to the construction of both the Olympic village and the press and broadcast centre is subject to renegotiation in light of the economic downturn and the reduction in the equity and contingent borrowing available. Again, it is important that the House understands the Olympic village's investment in new homes for the people of east London. Decisions will be taken about the scale on which the press and broadcast centre will be built, depending on the certainty of legacy.
	The second part of his question was, I think, essentially about the amount of sponsorship raised by the London Organising Committee of the Olympic Games and Paralympic Games. I can assure him that it is on target to meet its sponsorship goals. It has already raised more money at this stage than any previous Olympic city. However, it would be ridiculous to pretend that the economic climate is as easy and susceptible as it was when we made the bid. In these circumstances, LOCOG is doing an extraordinarily good job of raising money.

Vincent Cable: I beg to move,
	That this House is concerned at the increasing difficulties caused by the current economic crisis to many British citizens in maintaining their homes, paying their bills and providing for themselves and their families; believes that these problems originated not just in the global financial system but in unsustainable levels of personal borrowing and house prices which were overlooked by Government policy; is alarmed at the steep rise in mortgage arrears and repossession orders; regrets that, despite receiving £500 billion of taxpayers' money, the banking industry has failed to respond adequately to the needs of its customers or modify sufficiently its behaviour in respect of mortgage interest rates, new lending to struggling small businesses and its bonus culture; notes that the Bank of England has implemented the 2 per cent. cut in interest rates which the Liberal Democrats called for and urges it to make further cuts if the economy deteriorates further; and calls on the Government to introduce an immediate substantial cut in income tax to benefit low income and standard rate taxpayers, paid for by wealthy individuals who profited disproportionately from the economic boom and who do not pay their fair share of tax.
	Having checked that I have switched off my mobile phone, it is a pleasure to introduce an Opposition day motion that stands in my name and in those of my colleagues. Our purpose in bringing it to the House is to give Members an opportunity to review the rapidly deteriorating economic situation and to air some ideas and options about how it might be dealt with in the run-up to the pre-Budget report.
	We have noticed a pattern developing in the past few weeks whereby we come up with ideas and, whether they are on housing repossessions, interest rates or tax cuts, within a few days or even weeks, they are rapidly followed by the Conservatives, the Government, or both. We might almost say that the road to Damascus is becoming severely congested as they queue up to adopt our policies in different respects. Unfortunately, some Government Front Benchers do not convert quickly enough, and as a result, they leave themselves feeling somewhat embarrassed.
	I am glad that the Exchequer Secretary has been brave enough to come back to the House after the previous such Opposition day debate, because she may already realise that her comments on that occasion have become the stuff of radio and television comedy shows. I shall quote one of her more memorable observations during that debate:
	"The Liberal Democrat motion has been much commented on, possibly because it reads like the storyboard for "Apocalypse Now", or perhaps even "Bleak House". According to the motion, we are facing...the 'risk of recession'...Fortunately for all of us, however, that colourful and lurid fiction has no real bearing on the macro-economic reality."—[ Official Report, 2 April 2008; Vol. 474, c. 824-5.]
	It is only fair that we do not isolate the Exchequer Secretary too much, however, because Labour Back Benchers faithfully echoed everything that she said. I do not want to criticise a gentleman in his absence, but I am sure that he will not mind my quoting what he said. He is one of the more distinguished— [ Interruption. ] Indeed, he is here now. The hon. Member for Leeds, East (Mr. Mudie), who is a very distinguished and respected member of the Select Committee on the Treasury, said on that occasion:
	"I do not see how anyone can table a motion that suggests that we are nearing a recession".—[ Official Report, 2 April 2008; Vol. 474, c. 810.]
	Well, things do change in a six-month period.
	It is not just Government Members, however; the habit has spread. The Conservative shadow Chancellor is not present, but I remember that when I last spoke about economic matters, he intervened to rebuke me for irresponsible behaviour in respect of interest rates. On 14 October, he said:
	"By the way, I do not think that it is particularly sensible either for politicians speaking from the Front Bench to call on the Bank to cut or increase interest rates. Indeed, I make it a practice not to comment on them."—[ Official Report, 14 October 2008; Vol. 480, c. 708.]
	Well, I followed the hon. Gentleman last week around the television studios, where he claimed credit for having anticipated the cut in interest rates. Indeed, there was some mysterious process of intellectual osmosis by which the idea had communicated itself to the Monetary Policy Committee of the Bank of England, and for which he wanted to claim full credit.
	Without indulging too much in anecdote, however, I think that it would be useful to record some of the facts of the current economic situation. Those of us who talk to local business groups know that the position is really dire and will feed through to statistics in the coming months, but let us stick initially to the facts. The Government's own figures recorded a decline in output in the third quarter, and that represents a fall over the year. The International Monetary Fund predicts a stagnation of growth this year and a decline of 1.3 per cent. next year, which it believes is the deepest cut in any major western country.
	We talked at length about the housing market in our last Opposition day debate. The main market indicator suggests that there has been a 15 per cent. fall from the peak at the end of October last year and that house prices at auctions have now fallen by 30 per cent. since last year. It is worth contrasting that with what the former Financial Secretary to the Treasury told us when we debated this subject a few months ago:
	"House price inflation is declining, but it is doing so relatively gradually, and house prices remain higher than they were a year ago."—[ Official Report, 2 April 2008; Vol. 474, c. 803.]
	The Government told us that repossessions were not a problem, but they have doubled since the first quarter of 2007; at the end of October this year, they were 71 per cent. up on the year before. The latest figures suggest that there were more than 4,000 insolvencies in the third quarter of 2008—a 26 per cent. increase on the corresponding quarter the previous year. The unemployment rate is, mercifully, much lower than during the last recession, but at 5.7 per cent. on the international measure it is up worryingly, although we hope that it will not reach those alarming levels of the early 1990s.
	Those are the facts, although we will no doubt argue endlessly about the causes. A reasonably fair-minded view is that the problems and the depth of the recession that we now face are partly due to domestic policy failures and partly due to international factors beyond our control. As far as domestic policy failures are concerned, it is reasonable to point out the growing consensus that there was an excessive build-up of personal household credit linked to the boom in the housing market. We warned about that for the first time back in October 2003. Others, including the IMF and the Governor of the Bank of England, also issued warnings; even Conservative Front Benchers eventually spotted that there was a problem—the shadow Chancellor referred to it for the first time in January 2007. Clearly, there is now an acceptance that that major UK problem was domestically generated.
	There has also been an international banking crisis, for which obviously the Government are not responsible, at least directly. We should not be too complacent about that, however, because much of the shadow banking industry that originally grew up on the back of sub-prime lending activity originated or developed in the City. Until very recently, there was extraordinary hubris and complacency about the workings of financial markets in the City. A few months ago, the Minister's predecessors were talking to us in loving terms about how the City operated, a bit like little boys who had just discovered an unexploded bomb and thought that it was a shiny new toy. The Minister's predecessors now realise that many of the activities that were taking place were dangerous.

Vincent Cable: Indeed. The banks are simply widening their spread. That is their objective, as the right hon. Member for Wokingham (Mr. Redwood) suggested. The Government appear not to have thought through the implications of the agreement that they reached.
	What precisely was the understanding on bonus arrangements, which have been criticised in all parts of the House? Quite lavish bonus arrangements have been proposed by Lloyds TSB, which is one of the beneficiaries of the process. Mr. Hornby, who on any conceivable measure could be described as a business failure, is now being very lavishly rewarded by his new employer, Lloyds TSB. How is it possible that the Government reached a very specific agreement with the banks on bonuses only to have them completely disregard it?
	Let me make various suggestions on the banking programme before we move on. First, it is clear, as we have heard in the previous two interventions, that merely telling the banks that the Government are going to operate on an arm's length basis is causing confusion. The rational response of the banks is to build up their reserves to get the Government off their backs as quickly as possible so that they can pay dividends and bonuses. The Government's ambition appears largely to be limited to getting the taxpayers' money back as quickly as possible. While those objectives seem rational in themselves, pursued in isolation they potentially have devastatingly negative consequences. If the economy goes into a downward spiral and business credit is cut off, that further increases bad loans, which increase the amount of the recapitalisation that will have to take place. Can the Government be absolutely clear about whether they are going to intervene to give the banks more specific instructions?
	Secondly, can the Government tell us why they are now proceeding, in terms of their approvals, with the Lloyds TSB-HBOS merger? There may well be good commercial and public policy reasons for that, but I think that they are assuming that because it made sense six weeks ago in order to rescue HBOS from collapse, it still makes sense today. There are growing numbers of authoritative people in the banking system who say that it does not make sense. They want to have the options re-examined and they want alternative bids to be looked at properly. Along with Tavish Scott MSP, I have written seeking an appointment with Mr. Hornby and Lord Stevenson to explain why they are not willing to reopen matters on the part of HBOS. There is also a question for the Government, however. Will Ministers explain why they are allowing matters to proceed? The deal may well be beneficial to Lloyds TSB, but why is it in the national interest?
	Finally on the banking system, what the Government did in broad terms made sense in the context in which they introduced it, but a whole set of other problems are now coming over the horizon that have not yet been discussed. When will the Government discuss them? One of them was raised from the Back Benches a few moments ago: we have had half the policy. The Swedish model had a combination of elements, one of which was recapitalisation, and another concerned the "bad bank"—the Paulson-type plan, and the Americans have had the other half of the programme, but are the Government going to bring both halves together, and how will they do so? Are they thinking ahead to how the new banking system will operate?
	We are discussing at the moment a Banking Bill that is valid in many respects, but is limited in what it covers. It does not explain how the banking system, once it has emerged from its massive heart attack, will lead a different kind of lifestyle. One thing that cannot continue is the ambiguous relationship in which banks have what Cruickshank called eight years ago "regulatory privileges"—they depend on being bailed out, in other words—while they continue to operate on the maximisation of shareholder value. That contradiction cannot continue, and the Government need at an early stage to give ideas as to how they will deal with that problem.
	My second point about forward-looking policy concerns housing, which is the sector that has been most damaged. We encouraged the Government to pursue an idea that they had some months ago of buying up empty property and land, which is now available at heavily discounted prices, so that registered social landlords can increase the availability of social housing, thereby providing an injection into the building industry. Although the Government are talking the right language, the feedback that I have received suggests that absolutely nothing is happening. It appears that approval was given for £8 billion of investment in social housing, but that the money is not reaching the social landlords. There are problems with the Treasury funding arrangements and the rental arrangements that operate under Treasury rules, which are preventing progress from being made with the programme. Will the Government tell us how much of the social housing package has reached the social landlords, and how many houses they propose to proceed with in the context of the emergency to which we are told that they are reacting?
	On repossessions, 10 days ago, at Prime Minister's questions, the Prime Minister told us that the Government have proceeded with fresh instructions to the courts on how to handle repossession cases. We had been urging that, and we welcomed it at the time. The feedback I have received suggests that no instructions have yet been given, or if they have been, they are very discreet. No one is aware of any change in practice being communicated to the courts that process such matters. Moreover, there is an extremely alarming story in the  Financial Times today, which says that banks and building societies whose clients are in arrears for a few weeks can proceed to repossession without going to the courts; they simply issue an instruction to the bailiffs to repossess after a few months' arrears. The Government need to tell us how, through legislative or other action, they will prevent a cascade of repossessions proceeding through the winter, as growing numbers of people find that they are on short-time working hours, losing overtime or losing their jobs, and simply cannot afford their payments.
	Thirdly, we had a debate on small business a week or so ago, which my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) introduced. I do not want to go into further detail on the measures involved, but how will the Government develop the helpful ideas they have already set out for accelerating payments to small businesses that are involved in Government contracts? Will that extend to the vast numbers of quangos that operate under Government scrutiny? Will it be used for companies that are subject to Government procurement? The 10-day payment—the accelerated payment—is a good principle, but how far will the Government spread it? How far has the programme already gone?

Susan Kramer: Quite a number of statements have suggested that this economic crisis was a thunderbolt out of the blue. The Minister will remember, however, as a member of the Treasury Select Committee I visited the United States in January 2006. I cannot remember whether she was on that trip, but others from her party certainly were. Investment bankers made it clear to us that, while all was well that day, there would be a major crisis in the sub-prime housing market 18 months down the road, and that there were black clouds on the horizon. We attempted to pass those messages on to the Treasury, formally and informally—so there were warning signs.

Philip Hammond: Ultimately, once confidence has been completely restored to the markets, I guess the right hon. Lady is right, but sadly that is not the position that we are in. I hope that when the Chancellor and the Prime Minister announced the £250 billion guarantee facility—a very big, eye-catching, headline-grabbing number—they did not announce it with the expectation and intention that virtually none of it would be taken up. I hope that they announced it in the expectation that it would have the desired effect. It has not, however, because if it had, Libor rates would have fallen by 1.5 percentage points last Friday. That is where we need to get to. We must restore the link, because that is what is broken, and that is what needs urgent attention if we are to fix the credit famine that is affecting families and small businesses throughout the country. No amount of rhetoric or exhortation will deliver sustainable relief if we do not fix that mechanism.

John Reid: I do not intend to deal with fraud today—the issue of confidence is difficult enough to tackle.
	The essence of the banking system is intermediating between the essentially short-term nature of deposits and the longer-term nature of loans. In addition, the banking system intermediates between areas where there are surplus funds and those where there is excess demand for them. The inter-bank market has evolved to deal with that intermediation. The problem is that the market has evolved largely on a self-regulating, principal-to-principal basis. The market is also extremely opaque, with participants having only limited, historic information about their intended partners, whether borrowers or lenders.
	The problems that have arisen require a new structure for the inter-bank market, one which instils confidence, is transparent to the regulators at the very least, and is fully controlled. Regulation must be enhanced to focus on all exposures rather than operating in a world where exposures can be made to disappear by being taken off balance sheet.
	There is no doubt that the problem is huge. I make a modest suggestion, which may catch the Government's attention and that of other hon. Members as a possible solution. In summary, it would entail the world's central banks establishing an international monetary exchange, through which all future inter-bank transactions would go—let us call it "IMX". It would operate like any normal exchange, with the central banks fully and unconditionally guaranteeing the exchange counterparty performance, so that no bank would have a reason not to supply funds to the exchange. All central banks would be fully responsible for the liabilities to the exchange of the banks for which they were the primary regulator. The central banks would own and run the IMX.
	In the time available, let us consider the mechanism carefully. The IMX would operate like any other exchange, with the critical benefit that exchange participants could deal freely with the exchange without having to inquire about other participating members' credit status. Exchange technology is already well established and is available from many vendors. In my view, and that of those with whom I have discussed the matter, an exchange could be established in a matter of months by adopting the proven technologies from established exchanges.
	There should be an exchange for each major currency, with the initial establishment of a global euro exchange, a global dollar exchange, a global yen exchange and a global sterling exchange, which would be owned and run by the respective central banks for each currency. Each central bank would guarantee the performance of its relevant currency exchange and set rules for the institutions that would be eligible to borrow from the exchange.
	It is possible to identify some key features of such a system, even in the limited time available. First, anyone could offer liquidity to the exchange at a set price, including the central banks. Secondly, all inter-bank lending of participating institutions must be transacted through the exchange. Thirdly, borrowing from the exchange would be at the same price irrespective of the borrower, that price being set by the providers of liquidity to the exchange at any point in time. Fourthly, each central bank would set limits on local institutions and charge them for use of the guarantee.
	It is also possible to identify the major benefits that might flow from such a system if established. Such a system would restore the necessary trust and confidence to inter-bank lending, allow for an innovative and free market to operate, and provide regulators and Governments with consolidated real-time information on global liquidity flows and counterparty exposures, thereby helping to prevent excesses before they occur. One of the problems that we have experienced in the past is the lack of forewarning, just as the asset valuation of lenders and borrowers was opaque. Such a system would reduce redundancy through inter-bank netting at the exchange level and significantly reduce counterparty management and friction costs. I therefore put my proposal forward as one worthy of consideration.
	Such a system would do one further thing: assist in providing the basis for regulation. The current structure of the inter-bank market, coupled with the off-balance-sheet nature of many products, makes proper regulation of the financial system almost impossible. The unregulated nature of inter-bank and derivative activity, to which spokespersons in all parts of the House have referred, together with the many off-balance-sheet products, has facilitated the largely uncontrolled growth of credit and provided no early warning system to central bankers on either a global or local basis.
	The introduction of an exchange would provide central banks with the complete and instantaneous information required to regulate those banks that they stand over. The inability of any institution to access the exchange without receiving the approval and meeting the requirements of the authorising central bank would provide that central bank with a formidable array of controls, information and potential regulatory levers.
	We could ultimately provide an exchange that was self-funding, because institutions that would be members of the international monetary exchange should be charged for the access to funds which the scheme affords them. The unit cost of exchange participation could be set based on the stand-alone rating of the bank and the maturity of its net obligations—namely, on the degree to which it is a net borrower from the exchange.
	I do not pretend that there are not many other considerations that would affect my proposal, such as the central bank limit and over-the-counter transactions, such as credit default swaps and so on, which can be moved into it. However, such a system would at least begin to tackle the central problem that we face when we consider the recession, the acute crisis that we have come through and the chronic problems that we are somewhere near the beginning of addressing. In many ways, the most intractable problem is restoring sustainable confidence in the inter-bank lending system.
	I thus conclude by saying that, irrespective of the economic actions that are taken to stimulate national economies or, indeed, the global economy, it is essential that structural change should take place in the global banking market to avoid a future reoccurrence of the collapse in confidence and the freezing of the banking market that we have seen. I am entirely with the Prime Minister and condone his leadership in attempting to reformulate the international monetary institutions. However, in the absence of an exchange, it is unlikely that full confidence will ever be restored in the global banking system, as today's problems can easily reoccur.
	The essence of banking is ensuring the efficient use of funds for the benefit of industry and society, with a fully functioning inter-bank market being the cornerstone of that intermediation. However, the current inter-bank market is not working. It is inefficient, opaque and largely unregulated. Introducing a regulated exchange would restore confidence, and it would be more efficient and transparent, as all inter-bank and even derivative-type activity could be instantaneously, centrally recorded. It would also greatly enhance the regulatory power and information of the central banks. It would not solve all the problems, but I believe it would be a major contributory factor to addressing the central problem.

Ruth Kelly: We have all learned lessons during this credit crunch crisis and its implications. A natural fear of moral hazard at the emergence of the tightening of credit conditions has turned to a preoccupation with trying to fend off a global slump, as the reality of the impact that a severe credit crunch can have on the economy has dawned.
	The seeds of the crisis can be traced back to the development of current account and trade imbalances over the past decade, fuelled by financial market liberalisation and abolition of capital controls in the late 1980s, one symptom of which was the unfettered access of businesses and individuals to credit. Of course, many businesses and individuals are perfectly good credit risks, and not for a moment would I suggest—I hope that few Members of this House would suggest it—that we should roll the clock back to the days when individuals and businesses were denied credit lines.
	The soaring of current account surpluses in Asia led to low global real interest rates, which, combined with cheap exports, created downward pressure on inflation. The consequence was a sharp increase in borrowing in a number of countries, including the United Kingdom, partly financed by the inflows of foreign capital lending. As we all know, that was accompanied by the greater integration of capital markets, an increase in risk, a reduction in transparency and an explosion in credit derivatives as a response to the huge market in securitised assets. Credit derivatives were supposed to make securitisation less risky, but they ended up making it far riskier.
	As a result of that global interdependence—between banks and between banks and other financial institutions —the global system became particularly vulnerable to any shock. The immediate shock in this case were the losses in the US sub-prime mortgage market. Those losses made credit derivative contracts prohibitively expensive, securitisation ground to a halt, and banks became fearful of lending to each other and fundamentally reassessed each other's creditworthiness. Overnight lending dried up and this systemic risk was noticed and perceived not just in one country but across boundaries.
	That was the beginning of the real credit crunch—when it started to bite; the market turmoil; the halving of the capitalisation of world stock markets; the losses of $2.8 trillion, which are now being felt with dire consequences for businesses and individuals; and, of course, the risk of a global slump.
	In such circumstances, I would argue that the urgent need was for bold action to get the inter-bank market moving. I apologise for not taking up the proposition of my right hon. Friend the Member for Airdrie and Shotts (John Reid) as an automatic conclusion, and for not dwelling at length on that issue. As has been acknowledged, he was right to concentrate on that fundamental weakness in the system, but capitalisation and the degree of capital injected into the system were key ingredients in confidence. My right hon. Friend the Prime Minister and my right hon. Friend the Chancellor were, I think, right to take bold and urgent action to re-inject capital into the banking system, to inject liquidity and, of course, to institute the guarantee of inter-bank lending. We might need to reassess whether that guarantee is working, but I certainly would not jump to the conclusion that it was not being taken up and that that was a clear sign of failure: far more important is the price of inter-bank lending, which, of course, as my hon. Friend the Exchequer Secretary said, has fallen recently.
	The Bank of England is to be congratulated on its bold move to cut interest rates by 1.5 per cent., although many of us might wonder whether it did so soon enough. My right hon. Friend the Chancellor, too, should be congratulated on persuading the banks that they should pass the cut on to mortgage holders. It remains to be seen whether any further cuts in interest rates will have the same impact on personal lending rates.
	What about fiscal policy? It is absolutely right that the key macro-economic question, rather than the one of inter-bank lending, is whether there should be a fiscal stimulus. It is clearly right that borrowing should be allowed to rise during a recession, because accommodating an increase in benefit bills and a reduction in tax receipts will naturally lead to an increase in borrowing. I am glad that the official Opposition have now made up their mind that it is right to allow borrowing to rise and automatic stabilisers to be used during an economic downturn.
	The big debate is whether there should be a discretionary fiscal stimulus or loosening on top of the use of the automatic stabilisers. The judgment on whether there should be an additional fiscal stimulus seems to depend on whether we think that foreign investors will have confidence that we are not going to default on our debt, and, in particular, on what will happen to long-term interest rates. For any fiscal stimulus to be effective, it must be seen to be temporary. Were the Government to embark on such a venture, they would also have to plot a clear path back to a more sustainable or more balanced position.
	Such a move would be much more effective if it were co-ordinated internationally, rather than it resulting from unilateral action. When I look at the figures for the deficits and the public sector net debt as a share of GDP, I find it hard to accept that the markets would not think that the UK was a pretty good bet that could tolerate the running of a pretty large fiscal deficit for a while.
	I do not know how the Opposition explain the fact that public sector net debt, relative to GDP, is the lowest of any single major industrialised nation other than Canada. Of course, there is Northern Rock. The right hon. Member for Wokingham (Mr. Redwood) shakes his head. I think that the nationalisation of Northern Rock was essential, but the question is not what the level of deficit is but what the level of public sector net debt was when the situation began.
	According to the Office for National Statistics, public sector net debt was significantly lower than the level that we inherited in 1997. In fact, I clearly remember sitting in this Chamber when my right hon. Friend the Prime Minister, as Chancellor of the Exchequer, explained that he had used the telecom spectrum receipts to repay more debt in one year than had been repaid in the previous 50 years combined. Frankly, it is not surprising that we enter this downturn with a pretty good and sustainable debt position, which should enable us to take any action necessary.
	The Government must hold their nerve, continue to be bold and take the action required in the short term, but they must also think hard about the longer term international action required to put in place a new set of global rules to try to minimise the recurrence—or the likelihood of a recurrence—of a global credit crunch. My right hon. Friend the Prime Minister, with the Chancellor, is leading on reforming the international financial system and has argued for a long time for the overhaul of credit agencies. He argues, too, that the global system should offer countries incentives to behave well, and that international macro-economic action is required to stave off a global slump. In such circumstances, the premium is on being bold and taking the action required, and I think that the official Opposition will rue the day they decided to be so timid.

Kelvin Hopkins: The two could easily go together. Indeed, the rate that is charged to existing borrowers and whether one is extending borrowing are two issues. I would want to ensure that both of them are positive in helping the economy. Nevertheless, the reduction in interest rates last Thursday will make a significant difference to the disposable income of the existing mortgagors and borrowers, of whom there are millions, who have been paying interests rates that are too high. That will put a significant stimulus into the economy. I welcome that very much indeed.
	I return to the theme that I have raised many times in the House: the Government ought to retain control of the levers of economic management, which are several, but I shall mention the three main ones, the first of which is interest rates. I was an opponent of giving the Bank of England so-called independence. Interest rates should be controlled by the Government, who should be accountable to the House for their policy on interest rates. I have always thought that, and I think that it is the case now. Interest rates should not simply be geared to the inflation rate. Indeed, the Government are now saying that the Bank of England should consider the wider economic impact of changes in interest rates, not just inflation. If the Bank had been looking at inflation, which is currently and temporarily quite high, we would not have seen that reduction in interest rates last Thursday. I am glad that the Bank is now looking at the wider economy and acting appropriately.
	The danger indeed is not inflation, but deflation, which is much harder to deal with than inflation. If prices start to fall, which happened in Japan, arresting a fall in prices is very difficult indeed. People anticipate falls in prices and therefore abstain from spending until prices have fallen further, which generates a vortex of deflation and a downward spiral into slump. We must avoid that, and anyone who looks at the situation now and urges caution in Government spending or the fiscal stance is gravely mistaken. We are still in a very difficult situation, and I want to ensure that unemployment does not rise and that living standards do not fall, as is possible if we were to move in that direction.
	Another lever that the Government have wisely kept control of—to an extent at least—is the exchange rate. I applauded the Prime Minister when he decided as Chancellor not to enter the exchange rate mechanism. He kept control of our own currency, as a lever of economic management, and rightly so. Of course, the problem was that, after 1997, sterling appreciated substantially. That was a big mistake. I was one of those who supported the ideas of Richard Holthum, who had been the director of the Institute for Public Policy Research and who said that we ought to intervene in the international money markets to bring down the value of the pound, because sterling was overvalued. If hon. Members want evidence of how overvalued it was, they should look at our structural trade deficit over the past many years.
	We should have intervened to reduce the value of our currency relative to other currencies and avoided the situation that we are now in, with record trade deficits. Okay, that will have an effect on what we buy from abroad. I like a good bottle of French wine, for example, and I might have to pay more for it. What a terrible shame. It is appropriate that we ensure that our currency value is correct and suits our internal economic needs. If the pound depreciates, it deflects demand to home products and home producers, and it keeps the demand in our domestic economy high. That is what we should be doing now. I welcome the fact that the pound has been depreciated significantly in the past year, and I hope that it stays down and is managed to stay down for some time to come.
	Of course the third lever is spending and taxation. Perhaps we have not taxed enough. I would not say that we have not spent enough—we should have spent more—but we certainly have not raised enough in taxation while we have been spending over the past few years. I have said in the Chamber on a number of occasions that we should have raised taxes, particularly on the rich. I have also suggested that the Government should make greater efforts to collect all those taxes that are avoided—£33 billion-worth, according to the TUC's recent booklet. We should do more to avoid tax fraud. Tobacco smuggling and VAT fraud account for another £14 billion. There is money to be had, and the Government could rake in at least some of it if they made greater efforts. Even if they raked in 30 per cent. of it, it would make a significant contribution to the Exchequer and enable us to sustain public spending where it needs to be maintained.
	We should not be trying to restrict the fiscal balance; we should be worried above all to ensure that there is enough spending power in the economy to sustain employment in this very difficult time and to avoid above all going into a slump. That is a serious danger now. There has been talk about why the banks are still nervous. They are still nervous because there is still a lot of toxic debt around and they do not quite know where it is. The banks are nervous about lending to one another, because they do not quite know how much toxic debt each one has got.
	We have to make sure that the Government sustain the banking sector, and that we get through this difficult period. There is still the problem of toxic debt, and many hidden problems in the banking and international finance sector; we have to find our way through that, even if it means having a bigger state sector and more regulation. I must say that I applaud what my right hon. Friend the Member for Airdrie and Shotts (John Reid) said about international regulatory machinery. We are going back to something like the Bretton Woods agreement; we are starting to talk seriously about regulating the international finance sector, instead of leaving regulation to the financial markets and people who gamble with our lives—our money—for their own benefit. It is interesting that Nick Leeson, who went to prison for gambling with Barings bank's money to the extend that it went bankrupt, complains that people who do the same sort of thing now are just bailed out. We ought to look at that. We should make sure that those people do not get hold of our economies and our lives again. If we have to extend the public-sector part of the banking and financial institutions sector, so be it.
	I urge my Front-Bench colleagues to use all the levers of macro-economic power to make sure that, above all, we avoid a slump and build our way out of the obviously difficult recession approaching us. I have been unapologetic about my support for traditional Keynesian policies, for a degree of intervention in the economy, and for having a substantial public sector as part of an economy that can be managed by the Government. I am against leaving everything to the market.
	Keynes and others said that the market, when left to itself, tends to redistribute income from the poor to the rich. That is inherently deflationary, because rich people save more of their money, and poor people tend to spend it. If one wants to keep an economy buoyant, one has to make sure that poor people have enough money in their pockets to keep it going. If one gives it all to rich people, they put it in banks, save it, or put it in offshore accounts, and they deflate the economy. Redistribution and intervening actually help to keep economies buoyant, maintain employment, ensure a decent life for working people and bring about a high level of social justice, which is what most Labour Members have spent their lives fighting for. Obviously, I will vote with the Government tonight against the Liberal Democrats, but I hope that, in their new-found enthusiasm for social democracy, the Liberal Democrats continue to move further to the left, and eventually become socialists.

Susan Kramer: I very much agree. There is suddenly demand for a lot of new regulation, but wise regulation might be better than simply stacking up layers of additional regulation. We must work out what needs to be regulated and how it would be most effectively done, so may I suggest one step in that direction? Members will be aware that the Financial Ombudsman Service recently reached a verdict of maladministration against three of our most significant regulators in the case of Equitable Life, but the Government have not acted on that verdict. What better lesson could the markets, more broadly, and the regulators in particular, be taught than to live up to the terms that the ombudsman laid down, with an apology from every regulator to all those who lost out by taking pensions through Equitable Life, and the payment to them of the full compensation that the regulator called for?

Jeremy Browne: The right hon. Gentleman can be assured that they would pay less. Let me get to the party political dimension, because I know how much he enjoys that aspect of things.
	The Labour Government have not prepared us well for the current situation. As the right hon. Gentleman said earlier, the Government allowed private debt and house prices to soar to unsustainable levels, failed to make prudent assumptions when setting budgets for the public finances and were painfully slow to respond to rapidly changing economic circumstances earlier this year. As the Minister said, it is easy to make such observations in hindsight; it is much harder to make them in advance. That is why my hon. Friend the Member for Twickenham deserves such credit and admiration, because he did precisely that. The Minister spoke for half an hour, but at no point did she address the salient point made about her response in the House to the economic crisis earlier this year. She was completely dismissive and high-handed about the warnings that my party was offering, free of charge, to the Government. If they had listened at that point, they might have been better equipped to deal with the current situation than they have been so far.
	I am afraid that the Conservative party has gone through a terribly difficult period; the past few months have been a painful humiliation and a case study in hubris for what was once a great party. It is hard not to wince when recalling the cluelessness, opportunism and inconsistency that has come from the Conservative Front Bench. Earlier, the shadow Chief Secretary to the Treasury, who is no longer in his place, made a partisan speech, but he was the one who got his party's uncertain start under way when he made his now infamous observations on borrowing. In one interview, the hon. Gentleman said both this:
	"Increasing borrowing is not a strategy for dealing with the recession",
	and this:
	"To increase borrowing to deal with an economic downturn—that's a perfectly sensible thing to do."
	That was not an auspicious start, but to be fair the hon. Gentleman is only doing the bidding of his political master, the hon. Member for Tatton (Mr. Osborne).
	Unlike many of his own Back Benchers, I do not wish the shadow Chancellor any misfortune. I have followed the career of the Conservative child prodigy with a benevolent interest, and it gives me great sadness to say that at every single juncture of this economic crisis he has been found wanting. Let me illustrate the point. My hon. Friend the Member for Twickenham has led the debate on interest rate policy. We have already heard what the shadow Chancellor said in the House about interest rates in response to my hon. Friend the Member for Richmond Park less than a month ago:
	"I do not think that it is particularly sensible...for politicians speaking from the Front Bench to call on the Bank to cut or increase interest rates. Indeed, I make it a practice not to comment on them."—[ Official Report, 14 October 2008; Vol. 480, c. 708.]
	I am going to chronicle the terrible unravelling of the shadow Chancellor's credibility on the issue by referring throughout to that reliable journal,  The Daily Telegraph. Initially, there was a false start, because just two weeks after the shadow Chancellor made his comment in the House, the headline that confronted me as I opened the newspaper was "Osborne admits his mistake". I thought that progress had been made, but soon found out that the headline referred to a completely separate catastrophic error of judgement by the hon. Gentleman. However, I had to wait only a further 24 hours for the  Telegraph headline: "George Osborne: Slash interest rates to drag Britain out of economic nosedive".  [Interruption.] The hon. Member for South-West Hertfordshire (Mr. Gauke) says that the shadow Chancellor did not say that. However, I took the trouble of reading the article, which contained quotations attributed to the shadow Chancellor—they may have been written by him or by one of the teenagers in his office. One of the quotations stated that
	"there is plenty of scope to stimulate demand with lower rates".
	That is what the shadow Chancellor said, having told the House that it was his practice not to comment on interest rate policy. He is struggling to keep up; he is a follower, not a leader.
	Hon. Members do not need to take my word for that, as it is the judgment of the shadow Chancellor's own admirers. Only a week after the article that I mentioned appeared, on 7 November, there was a  Daily Telegraph headline that will cause sadness on both sides of the House. It read, "Support for George Osborne collapses". I did not say that, and neither did Labour party Members—Conservative party supporters did. Anybody who thinks that last week's cut in interest rates was a dramatic percentage fall needs to see the shadow Chancellor's credibility rating. In one month, his approval rating has fallen from 70 per cent. to 2 per cent., which is a mark of how well the Conservative party has responded to the economic crisis. The article went on to describe the sheer horror of the hon. Gentleman's position. It said, "Only Caroline Spelman"—an extremely inauspicious start to any paragraph about a politician in trouble—

Jeremy Browne: That is another extremely well-informed intervention. What the Conservatives did—I suppose that it is only fair given the lack of experience on their Front Bench—was rush into panic mode when they thought that there would be an opportunity for a quick hit when prices for unleaded petrol were going up to 110p or 112p a litre. My party had a reasonably detailed conversation about the Conservative proposal, concluded that it was completely potty, and therefore decided not to support it. We were well advised in that, because now the Conservatives, keen to tell everybody their policies, will be putting out leaflets, inappropriately called "In Touch", in every constituency saying, "Vote Conservative—we'll put your petrol up by 5p a litre."  [ Interruption . ] It is 5p this week, and it could get a lot worse. The Conservative proposition is, "Vote for the same taxes as under Labour apart from more on petrol." That is not a particularly impressive piece of positioning.
	My message to Conservative Members who long instead for decisive and coherent leadership is this: "You do not have remain trapped in the high-tax, wasteful spending box into which your shadow Chancellor has locked you. You can support this Liberal Democrat motion and show your constituents that you too believe in the values put forward by my party—effective public spending that offers real value for money, low interest rates to help struggling families and small businesses, and real tax cuts now for low and middle-income households, who need our help." Those are the right policies for Britain; they are Liberal Democrat policies, and they need to happen now.

Richard Younger-Ross: The hon. Member for Ynys Môn (Albert Owen) talks about people saying one thing and doing another, but Members should remember that a year ago Ministers said from the Dispatch Box that there would be no more reductions. There could, however, be another 3,000 reductions, so how hollow are those words Ministers uttered from that Dispatch Box, and how can we trust anything they say today?

Lindsay Hoyle: Will my right hon. Friend look again at the situation that we have got ourselves into? People who are using the Post Office card account were told that it would finish in 2010, but they were not told that there would be a POCA 2. Will he put right that wrong and ensure that not only will customers be told that the POCA is being replaced, but that we will encourage people to use the POCA, rather than give the discouragement that we have seen previously?

Susan Kramer: Do I correctly understand what the Secretary of State just said as a Government commitment to make up in subsidy any business loss that would come from shifting the POCA to another provider? If not, the comments that he is making are simply empty, because they merely presage other post office closures.

Peter Luff: I intend to speak primarily as Chairman of the Business, Enterprise and Regulatory Reform Committee, which this morning produced a report on this very subject. We published it because we were so concerned about the extraordinary delay in reaching a decision that was originally trumpeted as coming in early 2008, then hinted at before the summer recess, and now here we are in the middle of November still with no decision. I commend the report to the House. I am grateful to the hon. Member for Chorley (Mr. Hoyle) for waving a copy.
	However, I also want to speak as a constituency Member of Parliament, because it is from our constituents that we understand the importance of this issue. An 84-year-old man from Droitwich rang my office this morning to say how worried he was about the future of the Post Office card account. He explained that he and his elderly friends find it increasingly difficult to sort out their affairs because they can no longer speak to anyone to in order do it. He said that they find all these "touch machines"—his words—for statements of accounts and so on very confusing, and that even parking the car and using ticket machines is worrying. He said how important the post office was to him and his friends because, as the National Federation of SubPostmasters pointed out in its submission, they get advice there on how to do these things. That personal touch is what the card account brings to elderly, disabled, worried, confused or deprived people.
	I shall speak as a Select Committee Chairman, but I want to make one brief partisan comment first. I thought that the Liberal Democrats' motion was extremely good, and I discovered that that was because the hon. Member for Chorley drafted it. They have copied his early-day motion word for word and comma for comma, as he said. That explains the excellence of the drafting, which I commend to the House, and I invite the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) to vote for it in view of its origins, which are honourable indeed.
	I was a little surprised and disappointed by the Government's amendment in two respects. First, touching on an issue we have already debated, it trumpets the fact that there was no subsidy before 1997. A word in the Secretary of State's ear: that is the wrong attack. Royal Mail Group is in trouble because the Conservative Government probably took too much money out of it, denying it the investment it needed, because it was making so much money. It did not need subsidy. I strongly advise the Secretary of State not to repeat the line about no subsidy before 1997. If he wants to attack my party, there is a better way of doing it. Subsidy is not a particularly good thing to trumpet anyhow because the Post Office does not want to be subsidised; it wants to be commercially viable again and it wants a plan to work towards that. That is really important.
	On an even more partisan note, I would like to deal with this idea that the card account can be replaced with the
	"potential for future ID management business for the Post Office".
	So we replace a much-loved card account used every week by pensioners, through which they receive money, with an ID card that they do not want, which they replace perhaps once every 10 years, and for which they have to pay for the privilege. I find bewildering and surprising the idea that ID management in some sense replaces the Post Office card account. I shall vote with pleasure for the Liberal Democrat motion, knowing its origins, and with pleasure against the Government's amendment because it is so outrageously wrong.
	We are talking a lot about the future of the post office network and the potential for up to 3,000 closures. That potential certainly exists, but this debate is all about the 4 million vulnerable people who choose to use the Post Office card account. As we say in paragraph 12 of our report:
	"the POCA caters for precisely the people who do not want to, or cannot, use conventional bank accounts: in the very nature of things, they are disproportionately likely to be poor or elderly."
	They actually want the Post Office card account as a separate pot of money. Some of them have bank accounts, but they want that separate pot, too, because it helps them to manage their affairs. I sometimes think that the Department for Work and Pensions has a slightly patronising attitude of, "We know better than you how you should run your financial affairs." Actually, 4 million people still choose to run them this way, in the face of massive incentives not to have a Post Office card account, and those wishes deserve to be respected. As we say in our report:
	"Their needs should be paramount"
	as the Government reach their decision.
	I would like to highlight the question of state aid, which is a thorny question for the Government. The state aid permission for subsidising the network was given on five specific grounds, and as the hon. Member for Cardiff, Central (Jenny Willott) said, at least two of these depend directly or indirectly on the continuation of the card account:
	"the processing of social benefit and tax payments"
	and
	"universal access to basic cash and banking facilities and Government savings instruments, especially for rural customers and those on social benefits".
	As we say in our report:
	"The Government must consider the implication of the state aid decision".
	If the Post Office does not get the card account, the Government could also lose the ability to subsidise it. That will be necessary until the post office network makes money once again, as I believe it can under its new and very good leadership.
	As I said in my intervention on the Secretary of State, the Committee had some reservations about the access criteria, but broadly speaking we endorse them in the current circumstances. What a shame they were not spelt out in the tender documentation in the original advertisement in the  Official Journal  of the European  Union. The journal entry contained an important phrase. It said that the ATMs and personal teller outlets should be "located throughout the UK". It is an important phrase that the Secretary of State needs to note carefully. I believe that it gives him the opportunity to make the right decision on the future of the card account.
	There are two criteria that the Government need to bear in mind relating to that remark about the distribution throughout the UK. In paragraph 13 of our report, we say:
	"A tender which offered far more teller outlets than the 10,000 specified,"—
	the advert specified 10,000—
	"but could do so only in urban or relatively densely populated areas would not, in our view, meet the needs of POCA users."
	It is important to understand that. Paragraph 15 states:
	"Moreover, the new service will have to provide  reliable access to cash for those using the card account. No tender should be accepted if it cannot demonstrate that it can meet this need, at the branch most convenient for users."
	That is important.

Greg Mulholland: I entirely agree, and I pay tribute to what my hon. Friend has done in regard to rural issues in his community. Let me give another example of the lack of joined-up thinking. I think we would all agree that the Sustainable Communities Bill was an excellent idea, but the Government's action is eroding precisely what it aims to do. Sandra Jarvis also asked:
	"Is this the objective of the Government, in order to save on the subsidy it pays out to the Post Office?"
	I shall restrict my comments in order to allow others to speak, but let me say a little about the most vulnerable members of society. I refer to older people, disabled people, and people who find it hard to access services: people with learning difficulties and people with mental health issues. Those people were marginalised in the so-called network change programme. The Post Office spin doctors came up with that extraordinary phrase to describe what was, in fact, a closure programme. How very new Labour! Now the same people have been marginalised by the confused process involving the Post Office card account. The issues relating to access have been glossed over again.
	Has there been any assessment by the Department of the impact that its action will have on the lives of people who need to obtain the many benefits and services that they may need? There has not, and that is, quite simply, a scandal. Figures from Age Concern reveal that 76 per cent. of older people fear that they will lose essential services if there are more closures, 73 per cent. fear that they will not be able to access similar services in the local area, and 88 would have to make special travel arrangements to reach alternative services.
	A pensioner in my constituency to whom I spoke on Friday, Mr. Wilf McCombe of Bramhope, simply does not understand why the Government will not allow the Post Office to continue its card account. He said that one of the wonderful things about the account—let us concentrate on the positives—was that pensioners could go anywhere in the country to pick up their pensions from the post office. That is very useful when he is away on holiday or visiting relatives. He also not only made the point that people feel that through POCA they can access services in post offices they know and trust, but asked where the machines will be sited if the contract goes elsewhere. They will be sited in places that older and vulnerable people do not necessarily know or feel comfortable accessing, and they will probably simply not want to do so. Awarding POCA outside the Post Office will therefore be a blow from a business point of view—apart from the clear absurdity of doing that when it is supposed to be called the Post Office card account, as several Members have pointed out.
	We know there is a particular problem for older people and the most vulnerable. We have heard about the issues for rural areas and deprived urban areas, but there are pockets of people everywhere who will find that the problems of access mean that they might not leave their homes. As Sandra Jarvis said:
	"The Card Account holders at my office are Pensioners and the Unemployed, and for many of them it is the Social centre to come to the Post Office (and in the case of Pensioners perhaps the only time in the week that they get to leave their homes and speak to someone)".
	That is not being taken into account.

Greg Mulholland: That is true but, equally, what about areas such as Otley, north of the river? It is not necessarily a deprived area, yet the wonderful work done by Otley Action for Older People will be undermined by the recent closure of Newall post office. People in that area will simply not be able to access the services they need. The simple fact is that if the Post Office loses this tender, that will leave huge numbers of older people both financially and socially excluded.
	The Government have not faced up to the reality that if they do not follow through and ensure that the post office network is the recipient of POCA, that will sound the last post for a genuinely national post office network, as 3,000 more post offices have been predicted to go, which would leave about 8,500. That is simply not a sustainable amount, so the post office network will not be able to continue.
	I shall conclude by specifically addressing my friend, the hon. Member for Chorley (Mr. Hoyle), by saying that although he does not feel he should vote with our party this evening, the reality is that this is the last opportunity this House has to send a clear message about POCA. Labour Members are all too happy to march in local protests against post office closures, but they have the chance this evening to put their money where their mouth is and to march into the Lobby with Members from across the Opposition Benches to send the clearest possible message we can from this Chamber that POCA must be retained with the Post Office, as the consequences of not doing so are grave.

Elfyn Llwyd: Perhaps I should declare an interest, because my sister runs a sub-post office in the village of Eglwysbach, where she also has a small shop.
	I pay tribute to my hon. Friend the Member for Angus (Mr. Weir), who has done a lot of hard work on the Select Committee on Business and Enterprise. I fully endorse everything that the Committee said in the report that it published today and also what the hon. Member for Vauxhall (Kate Hoey) had to say. It just goes to show that there is all-party support on this matter. I speak for Plaid Cymru and the Scottish National party, and for members of the Labour, Conservative and Liberal parties—we are all agreed on this matter. There is a huge amount of feeling on it, and for good reason: the Post Office is a brand that we have all trusted and that we all know to be honest and forthright, and we need to maintain it at all costs.
	As has been said, hon. Members have bank accounts and can make choices, but others cannot do so. For example, there are 4,480 Post Office card accounts in my constituency, 8,000 in Clwyd, South—in north Wales—7,500 in Caernarfon and 8,140 in Ynys Môn. Those are big figures for small rural constituencies. It has been pointed out that losing the POCA would be a disaster for rural areas. My home village of Llanuwchllyn near Bala—the name will be a challenge for some—has one shop, which is a sub-post office. It will be lost and we will lose the only outlet in our village. There is a social side to this. Some of us have cars, but others do not and they will have to rely on relatively expensive public transport to travel 5 miles to the nearest town just to get the basics of life. That is unfair and we can reverse that situation. The Post Office needs some breathing space to enable it to do this work—we need this card account to remain where it is. I, for one, cannot understand what possible benefit will ensue if it is sent to a private concern.

Andrew Stunell: There is a glint of light in this debate, through the smoke and mirrors, from those on the Government Front Bench. They seem to have moved from hostility to uncertainty, and surely that is good as far as the card account is concerned. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), with his customary disingenuousness, suggested that the card account had been introduced by Labour along the lines of the national health service—as a miracle cure. May I remind the House that Labour brought the account forward with the greatest reluctance, because it was compelled to do so by the pressure in this House and in the country?
	As soon as the account was introduced, a series of bullying and inaccurate letters were sent to anyone who dared to apply for one, telling them to do something else. Of course, if that did not work, that letter would be followed up with a telephone call. I know that, because I have the letters and because my wife received the telephone calls. However, there was still massive take-up. Some 4 million took out the card accounts. Even this year—it might have been a clerical error, but it was an extraordinarily consistent clerical error—another letter went out, once again telling people that the card account was going to stop and that they should make alternative arrangements.
	Despite all that, in the borough of Stockport 18,000 people are on the card account—5,000 in my constituency. I want to tell the Minister and the Secretary of State that the nine post offices that they have left me with get, between them, about £30,000 a year of income from their handling of those accounts. That is equivalent to 50 per cent. of their business rate. If the Secretary of State takes that away from them, he will be putting a 50 per cent. hike on their business rate. They will go down. Whatever might be said about a move from hostility to uncertainty, that uncertainty is itself no help.
	The Secretary of State quoted from a letter that he had received from Mr. Thomson of the National Federation of Sub-Postmasters. However, he did not quote some of the other parts of that letter, including the phrase
	"uncertainty over the POCA is destroying subpostmasters' confidence."
	The Government face a doubled-edged problem.
	Since the card was introduced in 2003, my constituents who have card accounts have resisted every threat and blandishment to switch to private sector retail banking. During most of that time, banks were the UK's totemic success story, yet still my constituents did not want to switch. Some could not switch because they did not have the necessary credit rating. Many are unable to switch, because of mobility or disability problems, and for some of the other reasons that have been given already. Now that banks have never been more distrusted or reviled or more in disgrace, along come the Government, telling my constituents, "Leave the safe haven of a simple public sector system based on your local post office and put your trust in a nice big bright shiny bank where you can make a small contribution to a fat cat's big bonus".
	The other edge of the problem is the banks themselves. I shall briefly mention two cases. The first concerns a constituent who has recently had a stroke and can no longer write his signature with his right hand. He wants to cancel his account but the bank will not accept the cancellation because his signature is wrong. What sort of bank will not cancel a card because a signature is wrong? My constituent was told that he could get power of attorney. Brilliant. It is not his mind that has gone, but his handwriting.
	The second story is about an elderly lady who moved to live with her family and tried to switch money from her savings account to her current account in the bank she has used for 45 years. She was refused because she has a new address, is not on the electoral roll and has no utility bills, so the bank thought she might be a money launderer.
	I have to tell Ministers and the Secretary of State that it is not just that my constituents do not want the retail banking sector—the retail banking sector does not want them. It is ironic that while UK banks went broke lending billions, perhaps trillions, of pounds to sub-prime citizens of the United States of America, a United States bank—Citibank—will be moving in to pick up the sub-prime accounts of my constituents via POCA 2.
	In 1999, a revolt in the House forced the Government to set up POCA. In 2006, when the Government said the account would be cancelled, a second revolt forced them to continue it. We need a third revolt to make POCA permanent. The quality of life and convenience of POCA users must be maintained. The quality of our communities must be maintained. Retaining POCA is the way to do it.

John Thurso: I shall remain as free with my remarks as the right hon. Gentleman is with his.
	We heard two excellent Liberal Democrat Back-Bench contributions from my hon. Friends the Members for Leeds, North-West (Greg Mulholland) and for Hazel Grove (Andrew Stunell). They made it clear why hon. Members on both sides of the House feel so passionately that Post Office card accounts should be allowed to continue for a second generation.
	We want post offices not simply because we want post offices, but because they are economically valuable and provide a social good. As many Members have said, in rural parts of the world, post offices are the only place where many services are available. I will not bore the House with a recitation of the small villages in north-west Sutherland or the middle of Caithness that would have no opportunities if POCA 2 were not given to the Post Office.
	There is an opportunity here for the Post Office. In all my discussions with representatives of the post offices—the sub-postmasters—they say that they want post offices to transform. They want to provide a 21st century post office that can be profitable. However, they need the breathing space to get from here to there. That is what is absolutely critical about the award of POCA 2. Indeed, sub-postmasters have very good plans to make the post office a post bank—plans that I think many Members present would support.
	There is another point that we should take on board. The Department for Work and Pensions has been closing offices left, right and centre, including in my constituency. People now have to travel for three hours, in places where there is no public transport, to access a face-to-face interview. They have grave difficulties, and I could tell many stories about that. Post offices and sub-post offices are operated by literate, numerate, intelligent people. Why not use them as the front line for the delivery of services to the citizen? Why not give allow them to help fill in forms and explain matters? For a very modest cost to the Department, there would be a massive increase in the quality of service. People would not be forced to spend many hours on the telephone to Clydebank, and would not end up with the wrong answer at the end of it all.
	At the heart of this debate are the needs and desires of some of the most vulnerable in our society, including pensioners, the unbanked—financial inclusion is an important point that has been brought up—the disabled and all those on benefit. They trust their local post office to help them. "Trust" is a word that has come out in many contributions this evening. The Post Office, postmasters and postmistresses are trusted. It is that human contact that is missing, but that is so important to many people. Our constituents do not want to spend hours on a telephone, only to be given the wrong answer, or put on to another department when they finally get through.
	Our constituents value and want to maintain their post offices. They do not trust banks, and they have proved to be absolutely right in that. However, they do trust the Post Office. The replacement card account contract is wanted by the customers, our constituents. It is vital to the future of the network and supported by the vast majority of Members on both sides of the House. The Government have been overseeing the systematic removal of business from the post offices, and it is time to stop. It is time to support the Post Office and allow it to adapt to the 21st century. For that, Post Office card account 2 is needed, and needed by the Post Office.

David Drew: I thank my hon. Friend for his recognition that we hosted Gloucester City last year. Does he agree that one problem in a county such as Gloucestershire is that we have historically had very good football, rugby and cricket, but our facilities have not moved on? The rugby club, as he knows better than I do, has had a difficult job in evolving a new stadium. We need outside help, because every area is looking to renew and regenerate. It is about time we did that in Gloucestershire.

Parmjit Dhanda: I am grateful to my hon. Friend for that, not least because he reminds me that there are far greater implications for the community, too. Gloucester City have 120 people involved in their youth teams. A further 100 are involved in couching and working with young women, too. To have a modern site, albeit a modest one, in the heart of my constituency would make a real difference to all the local communities.
	Just a couple of weeks ago, I was with local fans at a fundraiser for the club. One activist there—a diehard fan by the name of Nigel Hughes—came up to me. He has recently been widowed; he lost his wife just a few weeks ago. He said, "Parmjit, right now at this time in my life, this football club means more to me than you could ever imagine." I know that many other people in the city of Gloucester feel the same way. They are equally passionate about our local club. For Nigel Hughes' sake, for Beverley Hughes, for all Gloucester City supporters and for the city of Gloucester, I hope that my hon. Friend can help me to work with the local authorities, the Football Foundation and the local club to bring Gloucester City back home where they belong.

Barbara Follett: That is, of course, a matter for the Football Foundation, but I am sure that, as my hon. Friend has raised the matter tonight in the House, it will take it into account and work with Gloucester city council and the county council, as it has with many other authorities, to ensure that we have the provision in England that we need.
	The support that the Government give to local authorities comes mainly through Sport England, which has developed a range of strategic planning tools to assist them to modernise their leisure facilities and to ensure that the right facilities are provided in the right locations. That is helping local authorities to identify the gaps and to target resources where they are most needed. Sport England's facilities improvement service is also working closely with local authorities to improve their strategic planning for community sport locally. Additionally, the unprecedented Government investment through Building Schools for the Future offers a number of unique opportunities to local authorities. The Government therefore expect local authorities to consider how new developments can build on the current and anticipated sporting needs of local communities.
	Investment in football is very important. Football is our national game and incredibly popular. However, the peak of the game accounts only for a very small amount of those that are involved in football. As my hon. Friend mentioned, children and young boys and girls are really getting involved at a much lower level. Football authorities recognise the wider impact of the game, especially in the lower leagues and at the grass-roots level. Sport England's active people survey shows that football is as popular an activity in Gloucester as anywhere else in the country.
	Football is one of the sports that have submitted a whole sport plan to Sport England for funding from 2009. That includes how it proposes to invest money in facilities to help to develop the sport. It is right that football receives Government funding, as the sport helps to deliver our sporting aims. That is why the Football Foundation, the premier league, the FA and the Government together have invested more than £300 million in football since 2000. That includes £2 million in community projects in my hon. Friend's constituency of Gloucester. Those projects have ranged from a £400 grant awarded to Gloucester City girls football club for new kit right up to a £426,000 grant to Abbeydale Community Association towards the development of its facilities. In addition, the Government have, through Sport England, invested more than £59 million in community football since 2005.
	Turning specifically to Gloucester City football club, I should first like to acknowledge and congratulate the club on its 125-year history and on its incredible resilience. Having been flooded out of its ground three times during its history, it is remarkable that it has reached that milestone. I note that my hon. Friend is sporting the club's yellow and black tie; it looks like a bee or a wasp, and they are very tenacious insects.
	I was disappointed to learn of the devastating impact that the 2007 floods had on the club's Meadow Park ground. Although all those concerned will have been extremely disappointed about that, I was pleased to note that the football family in Gloucester has come together to help Gloucester City football club find temporary homes, first at Forest Green Rovers football club, and now at Cirencester Town football club.
	I know that the club has been working with a range of interested parties, including the city and county council and the Football Association, at national and county level, to identify appropriate sites for a new stadium. My hon. Friend mentioned the names of some of those sites. I encourage the club to continue discussions with those parties, and to consider the options available through the football stadia improvement fund. I am informed that up to £150,000 could be available from that fund for the development of a new ground. I am also advised that up to £100 million—sorry; I wish it was that much. I am advised that up to £1 million of funding could be available through the Football Foundation to support additional facilities. As I understand it, the club has aspirations to develop a community facility. That funding route may be open to it, if its aim is achieved.
	I urge the local authorities in Gloucester to undertake a full review of their sports provision, to plan strategically for the future and to consider whether the club's desire for a new stadium could be met through the provision made to meet the sporting facility needs of the local community. I ask my hon. Friend to keep my hon. Friend the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Bradford, South (Mr. Sutcliffe), who has responsibility for sport, informed of progress on the issue. In turn, I will inform my hon. Friend the Under-Secretary of the various options that my hon. Friend the Member for Gloucester is considering.
	I wish Gloucester City football club the very best of luck. It is lucky to have my hon. Friend as its constituency Member of Parliament.
	 Question put and agreed to.
	 Adjourned accordingly at Eleven o'clock.